The tribunal held that limitation does not apply to applications for substitution of assignees in debt recovery proceedings under the SARFAESI Act.
Appeals dismissed without costs. DRT directed to expedite disposal of pending original application.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr Justice Ashok Menon, Chairperson
Appeal No. 192/2016
Between
Pravin Padmakar Banavilikar … Appellant/s V/s. State Bank of India …Respondent/s
And
Misc. Appeal No. 134/2022
Between
Pravin Padmakar Banavilikar … Appellant/s V/s. State Bank of India & Ors. …Respondent/s
Mr Jamshed Ansari, Advocate for Appellant.
Ms Medha Behere, Advocate for the Respondent No. 1 Bank. Mr Sanjay Anabhawane, i/b M/s. M & S Legal Ventures, Advocate for Respondent No.2.
-: Common Order dated: 16/01/2023:-
Appeal No.192/2016 is preferred by the sole defendant in Original Application (O.A.) No. 383 of 2012 on the files of the Debts Recovery Tribunal-III, Mumbai (DRT) challenging the interlocutory order of the Ld. Presiding Officer dated 01/04/2016 in I.A. No. 834/2016 seeking dismissal of the Original Application for the reason that despite the assignment of the debt, no steps have been taken to substitute the assignee in place of the original
1
applicant.
The above-mentioned O.A. was filed by the State Bank of India (SBI) for the realisation of the amount due from the defendant. During the pendency of the O.A., the debt was assigned on 25/06/2014 by the SBI to the Asset Reconstruction Company India Ltd (ARCIL). The fact regarding the assignment of the debt was informed by the SBI to the defendant/appellant vide letter dated 18/09/2014. ARCIL was also sent the letter of even date by the SBI asking them to take steps to get substituted as the applicant in the O.A. Even after the lapse of three years, ARCIL has not taken any steps to get itself substituted in place of SBI. According to the defendant, this is an indication that ARCIL is not interested in pursuing the O.A. before the DRT. Hence, the defendant filed an application requesting the DRT to dismiss the O.A. Soon thereafter, I. A. No. 982/2018 was filed for substitution of the applicant and
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the same was allowed vide order dated 15.09.2022.
8. Per contra, the Ld. counsel appearing for the Respondent submits that the concept of abatement is inapposite where a merger
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takes place in the course of a scheme of amalgamation sanctioned by the company court. He relies on the decision of the Hon’ble Bombay High Court in Delta Distilleries Ltd vs. Shaw Wallace and Co. Ltd 2008 (1) Mh. L.J 899 to argue that the assignment of debt by a bank to an Asset Reconstruction Company has a similar effect and therefore, the provisions of the Limitation Act would not apply.
9. Section 130 of the Transfer of Property Act, deals with the assignment of actionable claims. These legal provisions essentially provide that an assignment must be by way of an agreement in writing, and the fact of the assignment must be notified to the debtor. In the instant case, the SBI has assigned the debt due from the defendant to ARCIL by means of an assignment deed. There is no dispute that the debtor in the instant case has been informed about the assignment. Soon after the defendant filed the application for dismissal of the O.A., I.A. No.982/2018 for substituting the original applicant SBI was filed, and now stands allowed by the DRT.
10. Under sections 5 (4) and (5) of the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’, for short) there is a provision for an assignee to continue the proceedings and for substitution of its name in any pending suit or appeal of the proceedings. Though there is no such specific provision under the Recovery of Debts and Bankruptcy Act, 1993, the provisions in the SARFAESI Act provide for application for substitution to be filed in a pending suit, appeal or other proceedings, and on receipt of such application, empowers the DRT or the Appellate Tribunal or Court or Authority
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to pass such orders of substitution of the asset reconstruction company. The statute does not prescribe a period of limitation for such substitution.
11. Further, applying the principles of the Code of Civil Procedure under Order 1, Rule 10, a necessary or proper party can be impleaded at any stage to effectuate complete adjudication. There is no period of limitation fixed for bringing on record a proper party to the suit. Similarly, under Order 22, Rule 1 of the Code, when there has been an evolution of interest during the pendency of a suit, the suit may, by leave the court, be continued by or against persons upon whom such interest has devolved and this entitles the person who has acquired an interest in the subject matter of the litigation by an assignment or creation of a division of interest pendente lite or suitor or any other person interested, to apply to the court for leave to continue the suit.
As a result, the appeals are dismissed, though without costs. The Ld. Presiding Officer is directed to make earnest attempts to dispose of the Original Application No. 383 of 2012 as expeditiously as possible since the application has been pending for more than a decade.
Sd/Chairperson
mks-1 & 2
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2 issues framed by the court
Whether Article 13 of the Limitation Act, 1963 applies to a late application for substitution of an assignee as applicant in a debt recovery proceeding.
Whether the assignment of debt by a bank to an Asset Reconstruction Company under SARFAESI bars limitation provisions.
Colour shows how this judgement treated each authority
KSEB vs. T.P. KunhaliummaRelied on¶23
KSEB vs. T.P. Kunhaliumma (1976) 4 SCC 634 · Who else cites this
Ballumal A. Jaisingh vs. M/s J.J. Builders and othersRelied on¶23
Ballumal A. Jaisingh vs. M/s J.J. Builders and others 2003 (3) Mh. L.J 238 · Who else cites this
Basaraj and Another vs. Special Land Acquisition OfficerRelied on¶23
Basaraj and Another vs. Special Land Acquisition Officer (2013) 14 SCC 81 · Who else cites this
Delta Distilleries Ltd vs. Shaw Wallace and Co. LtdRelied on¶24
Delta Distilleries Ltd vs. Shaw Wallace and Co. Ltd 2008 (1) Mh. L.J 899 · Who else cites this
4 provisions across 3 enactments
Pravin Padmakar Banavilikar
State Bank of India
Ashok Menon
As recorded by the court registry
4 orders share this CNR
Judgements on the same questions, provisions and authorities, from every court
